The head of Detroit’s law department says the city shouldn’t allow new development group to buy an estimated 2,000 to 4,000 properties on the northwest side headed for the annual tax foreclosure auction.
Instead, the group should buy up to nine properties to prove they are a “community partner,” Melvin “Butch” Hollowell, the city Corporation Counsel, said in a statement released Tuesday.
“The city does not support this proposal,” the statement said of the proposal by the Home Team Detroit development group. “We have a number of serious concerns, especially Home Team Detroit’s ability to deliver on such a massive scale with no particular track record to suggest they would be successful.”
The development group is seeking the right to buy thousands of properties before they end up in the tax auction that the developers say will then be fixed up while offering paths for tenants and future tenants to become homeowners.
The plan spans an area that covers 25 square miles and 24 neighborhoods, about the size of Manhattan. The homes are in an area that stretches south of Eight Mile, west of Woodward and just east of Telegraph. Its jagged southern borders reaches Fenkell and, in some cases, beyond that.
Hollowell’s statement could kill the deal. The Home Team group wanted to purchase the properties under a process known as “right of first refusal.” The Detroit City Council and Mayor Mike Duggan would have to approve the sale. Wayne County and the state of Michigan would also have to agree to not buy the properties as well, since both also have that option before the public auctions.
Home Team Detroit founder David Prentice had no comment when contacted Tuesday.
In an earlier interview, Prentice had said the group has a plan that allows it to work with people that traditional lenders won’t touch because of credit ratings or because of the locations of the properties. The group’s financing plans are centered around the controversial land contract system. Also known as contracts for deeds, land contracts are alternatives to mortgages. Tenants make payments directly to the property owner — in this case that would be Home Team Detroit —and often have no ownership stake until the entire debt is paid.
Prentice also said that if the proposal is not approved, the group is not likely to try to buy the properties during the two county foreclosure auctions this fall. Properties end up in the annual — held in September and October — when an owner fails to pay property taxes for three years along with other penalties for not paying on time.